LIPA vendor unit faces fraud suit

Three former managers of PSE&G, the New Jersey utility whose parent PSEG recently won a contract to manage the Long Island electric grid, allege in a recent lawsuit that the company billed consumers for improper expenses related to its renewable energy programs, then fired the employees when they attempted to blow the whistle.

The company's aim, according to the suit, was "to secure illicit profit" from renewable energy and efficiency projects at consumer expense. PSEG's efforts in renewable energy and efficiency were cited last week as one of the reasons it was awarded the $3.3 billion LIPA contract, which takes effect in 2014.

In addition to passing along improper expenses, the suit alleges that PSE&G ordered a manager to book efficiency program investment dollars "in an inappropriate fashion" and accuses it of "double-dipping" in billing municipalities for the maintenance of energy-efficient lighting, even though a lighting supplier was already paying the costs.

A PSEG spokesman said: "The company is aware of these claims brought by former employees, all of whom were discharged for lawful reasons. These allegations are entirely without merit. The company is prepared to vigorously defend its position."

Asked if the company had been contacted by law enforcement about the charges, the spokesman said, "I am not aware of any contact of that nature."

The PSEG website said the company has a policy to "never retaliate or permit retaliation against any person who, in good faith, raises an ethics or compliance concern or participates in a review or an investigation of reported wrongdoing."

The three managers seek back pay and unspecified damages and their jobs back.

Stuart Stott, one of the PSE&G managers, according to the suit filed Monday in State Superior Court in Essex County, N.J., alleged that he was ordered to record as expenses items such as a $300,000 billboard touting a solar energy project, even though the cost was unrelated to energy generation, an expense requirement.

"PSE&G would not only get a free billboard advertising itself, it would earn a profit as a result of its construction, all at the expense of PSE&G customers," the suit says. Customers pay for the renewable programs through state-mandated charges on bills.